Government plans to marginally raise spending by Frw 4.9 billion from Frw 1949.4 billion approved by Parliament in June 2016 to Frw 1954.2 billion, Claver Gatete, the Minister of Finance and Economic Planning has said.
Presenting the revised budget proposal before a joint Parliamentary session, Minister Gatete suggested key changes which include:
•Increase in tax revenue arising from the accelerated roll out of the electronic billing machines, increase in non EAC imports and larger than expected exchange rate depreciation
•A downward revision of total grants on account of lower expected disbursements
•An increase in total expenditure to account for delayed spending for priority infrastructure projects, provide funding for the pre-financing of new UN Peace-Keeping Operations, expanded Rwandair operations and the initial equity of Government in the new Bugesera airport project
“The 2016/17 revised budget is part of the revised medium term macro-economic framework which is guided by the need to address the external shocks affecting the national economy. It is also consistent with the long term objective of increasing domestic revenue mobilization while introducing expenditure prioritization measures to reduce the fiscal gap and the reliance on external funding,” Minister Gatete told lawmakers.
Government proposes Frw 3.9 billion net increase in domestic resources from Frw 1,182.4 billion to Frw 1,186.3 billion. It expects a rise in tax revenues of Frw 9.8 billion from increased Value Added Tax (VAT) collections as well as increase in non-EAC imports. However non tax revenues are expected to decrease by Frw 5.9 billion on account of lower administrative services fees projected.
Government estimates grants to reduce by Frw 38.8 billion from Frw 365.3 billion in the 2016/17 original budget to Frw 326.6 billion. The reduction is mainly due to expected lower disbursement of Global Fund grants.
Total loans for the revised budget are expected to increase by Frw 7.4 billion on account of World Bank loan for agriculture sector and exchange rate gains due to depreciation of the Rwandan franc. This will push total loans from Frw 367.7 billion in the original budget to Frw 375.2 billion.
Included in the revised budget is Frw 11.5 billion expected from the sale of government stake in I&M bank (Rwanda) Ltd. The money will be invested as initial Government equity in the Bugesera Airport project.
Government also expects increase in domestic financing by Frw 20.8 Billion from the use of Government bank deposits from Frw 34.0 billion recorded in the original Budget for fiscal year 2016/17. This increase would push overall domestic financing to Frw 54.8 billion.
Government proposes Frw 47.9 billon increase in recurrent expenditure from Frw 945.7 billion approved in the original budget to Frw 993.6 billion. The increase will cater for additional allocation on wages and salaries, additional allocation on recurrent non-wage expenses such as pre-financing of the UN Peace Keeping operations, debt servicing, Rwanda Correction Service and National Electoral Commission spending shortfalls, Iwawa Rehabilitation Center’s Operations among others.
Development budget is expected to decrease by Frw 7.8 billion from Frw 785.7 Billion approved in the 2016/17 original Budget for 2016/17 to Frw 779.9 billion. On domestically funded projects, the change reflects the cut on allocation of Global Fund projects due to the reduction of initially projected disbursements. However, additional funding was provided on other key domestically funded projects including spending shortfall in taxes & expropriation on infrastructure projects, Oil & Gas exploration project, E-passport, Valley dams, High Commercial Court among others. On externally funded projects, the net increase of Frw 2.5 Billion reflects mainly gains from exchange rate depreciation.
The Budget revision proposal reflects changes in revenue sources as well as related and corresponding adjustments on the expenditure side.